MINISTERIAL ACCOUNTABILITY FOR FISCAL TARGETS

The Balanced Budget and Ministerial Accountability Act (BBMAA) addresses fiscal responsibility by legislating balanced budgets beginning in 2004/05. The act also provides for greater ministerial accountability by imposing penalties if spending targets and, in some cases, performance targets are not met. The act comes into effect on April 1, 2002.

The BBMAA works in concert with the Budget Transparency and Accountability Act (BTAA). The BTAA legislates the requirement for service plans and annual service plan reports. Ministries and government organizations must publish these documents, which set out their goals and specific objectives and performance measures, and later report on results achieved. The BTAA also requires ministers to sign accountability statements in service plans confirming they are responsible for the basis of the plans and for achieving the specific objectives.

The BBMAA requires balanced budgets beginning in 2004/05, prohibiting deficits thereafter. Deficits are permitted in 2002/03 and 2003/04. However, if the actual financial results are worse than the original budgeted amounts, salary penalties will apply both to Cabinet as a whole and to individual ministers.

For the next two years, the provisions of the act work in the following manner:

• Each minister's Cabinet salary¹ is reduced by 20 per cent, effective April 1 of each year.
• This reduction may then be restored, in whole or in part, based on the following conditions:
• 10 per cent is restored if the government's bottom line result meets or beats the deficit target for that year.
• The other 10 per cent is restored to individual ministers if the actual spending in their ministry (including other appropriations under their responsibility) is less than or equal to the target set out in the main Estimates for that year.

For the 2004/05 fiscal year and thereafter, the first 10-per-cent reduction is restored if there is not a deficit and if the actual surplus is at least 50 per cent of the budgeted amount.

As before, the other 10-per-cent reduction is restored for individual ministers if they remain on or under their spending budgets, as set out in each year's main Estimates.

There are two unique cases, one for the Minister of Provincial Revenue, and one for ministers of state. They are:

• The second half of the 20-per-cent reduction is restored for the Minister of Provincial Revenue if the actual incremental revenue received in the year from designated sources as a result of audit and collection activity meets or beats the target specified by Treasury Board regulation each year.
• The second half of the 20-per-cent reduction is restored for ministers of state if specific performance targets, documented in their respective ministry service plan accountability statements and specified in regulation, are achieved. For example, in 2002/03 the Minister of State for Deregulation is to achieve a 12-per-cent reduction in the regulation burden, and the Minister of State for Early Childhood Development is to establish urban Aboriginal early childhood development programs in 18 communities.

The financial results for a given year will be published in the Public Accounts and performance results will be published in annual service plan reports produced by each ministry. These documents will be made public by August each year. At that time, if the conditions of the BBMAA have been met, the portions of ministers' salaries that had been withheld will be reimbursed.

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